Hi just wanted to know about CPG tax when selling your primary residence.We have purchased a home in Qld which is rented out at the moment but will be available at the end of the year.If we move up into that residence and then rent out our current home in Vic do we have to pay CPG Tax on the Vic property when it comes to selling it?
We have heard that if we rent out both properties and find a place to rent in Qld then we can sell our current home in Vic before six years is up and not pay CPG Ta

Hi Daryl

Great question and you have a lot to consider. So the important thing to note is that you can only have 1 primary residence in Australia at anytime.

So you are right that when you move to Queensland and rent a property and rent out your properties in Victoria and Queensland you can claim a Capital Gains Tax (CGT) exemption for the Victorian property only for the lesser of 6 years or the time you don't have another property that is your primary residence.

If you decide to move into your Queensland property and rent out your Victorian property CGT will apply from the start of the period that you rent it out till when you sell it. So it is important that you get a property valuation to establish the market value at the start of the period when you rent it out.

It is important to remember that as long as your property is owned in individual names and you have hold it as an investment for longer than 12 months you should be eligible for a 50% discount on the capital gain made on the sale, on which the CGT is calculated at your marginal tax rate.

Please note that I am not an accountant or tax agent, but I am sure one of the accountants in here will provide some further clarification if required.

I guess the question I would ask is, do I want to be paying rent to someone else and paying for their property just to save some tax, when I can be using that money to pay off my own loans or contribute it to super if you do not have any loans.

Thank you Mark.

Hi Daryl,
As Mark has answered you can only claim one primary residence exemption at a time. Don’t be afraid of paying Capital gains tax though, it means you’ve made money.
It would be well worth sitting with a financial adviser who could run the numbers on all three scenarios for you. There are many things to consider such as if you might move back to Victoria some day, what effect holding both properties would have on your cash flow and lifestyle and what tax efficiencies you could get from a different investment property.
Get some professional advice and you will be much better off in the medium to long term.
Best of luck
Scott